Under the given demand

Under the given demand - curve S or C is the average cost...

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Under the given demand-cost structure no other level of output can help to enhance his profit. In an equilibrium the monopolist charges price P which is determined by a corresponding point R on the average revenue curve. The total revenue of the monopolist is then, TR = OQ × P = OQRP Similarly the total cost of the monopolist is governed by a point on the average cost
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Unformatted text preview: curve. S or C is the average cost of producing output Q in which the total cost will be TC = OQ × AC = OQSC The profits of the monopolist as the difference between TR and TC are, Profits = TR - TC = OQRP - OQSC = CSRP Hence CSRP are the monopoly profits. These profits look similar to Super Normal profits under competition....
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This note was uploaded on 11/26/2011 for the course ECON MICRO ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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